Reducing Financial Risk through Chapter Management in the Wake of SOx
The Sarbanes Oxley Act (affectionately referred to as SOx) was signed into law in 2002 in response to corporate and accounting scandals of a number of high-profile companies. The provisions of the Act apply generally to publicly traded corporations, but it also served as a wake-up call to the entire non-profit community. Shortly thereafter, we began to include discussion of improving internal controls into our Board leadership trainings. For one of our clients, discussion quickly centered on the fact that this national society was responsible for, yet had no fiscal oversight of, eight financially independent chapters. We learned that two chapters were each plagued by an instance of apparent lack of fiscal responsibility. What to do next?
The Board decided to make the Chapters an offer they could not refuse: CMG would assume financial management of each Chapter's accounts payable/receivable, dues renewals, meeting registrations, corporate contributions and year-end tax reporting. Best of all, the parent society would pick up the bill! Now the Chapters have the support they need to manage their finances in accordance with best practices and GAAP requirements, and the parent Board members sleep better at night.
CMG is attentive to laws that impact our clients' financial management and is poised to make adjustments as necessary. We are accustomed to requesting independent third-party audits to provide complete financial transparency to our Boards. We are also well experienced in Chapter management and can help take the worry out of this responsibility.